This will not win me many friends on the vendor side, because what I am about to suggest will not only help dealers structure their month, but will leave them still happily married with a full head of hair.

Dealers will no longer have to dedicate time after hours finishing projects or pulling out their hair from playing catch-up. On the other side, it will stop the growing epidemic of carpal tunnel syndrome that vendors are experiencing by eliminating endless calls trying to track down dealership folks.

I understand “sales” is often linked to persistence and determination, but there needs to be limits. I’m recommending that dealers create a Vendor Visit Protocol and win back time in your day.

Do you seem to have vendors walking in unannounced on a daily basis, whether they’re current partners of your dealer or simply trying to sell their wares?

If anyone knows me they know I love data visualizations. Frankly, I think graphs tell a better story than most bloggers or writers. I came across this gem and had to hear what the automotive community thought.

Pricing vehicles to market has been a long trend in our industry and in 2011 some incredibly smart folks studied some 22 million used car transactions and found clear drops in price at every 10,000 mile interval. What is even more interesting is they estimate the financial impact of this mis-pricing is about $2.4 billion of financial missed opportunity.

Take a look at this graph. It details the average sales price of a used car based on the mileage. Links to the source and original blog can be found at the bottom of this post. [Read more…]

In 2014, auto dealers on average produced used vehicle department net profit of about $120,000. That number includes F&I. The average dealer sold 621 used vehicles retail (with another 435 sold wholesale).

In 2014, the average auto dealer made $193 net profit per used vehicle retailed.

That number is down from $254 in 2013 and about the same as in 2012.

Anyone can access NADA Data and see these simple facts. If I added all the man hours it took to produce that kind of net profit and compared that to any other industry I would bet that auto dealers return on hourly investment is one of the lowest per hour rates of any industry.

However, consumers perceive auto dealers much differently. Dealers made 2.2% net profit in 2014, a number which has been constant for each of the last 5 years. In comparison, Apple’s net profit margin is 10x that. Even Wal-mart has 54% higher net margins than the average auto dealer. Hmmm.

So, I ran a simple Google Consumer Insight Survey to find the actual perceptions of consumers. The results even surprised me. I laid out 5 options randomly for consumers to select and asked them how much net profit they thought dealers made per used car they sell.

Check out the actual Google Consumer Insight chart below…

90% of respondents thought dealers made over $254. 76% of respondents thought dealers made over $1,000. And incredibly, over 50% of respondents thought dealers made over $2,000.

In our industry I’ve heard the increased use of the word transparency. I think transparency and education are fundamental elements of trust and when considering a car may be one of the largest purchases of anyone’s life, how do we instill trust now and in the future.

So what do you think?

How can dealers educate customers to the realities of their business? Is it wrong to disclose how the automotive market works? And if transparency is advantageous, how can auto dealers use transparent processes in the future? Comment over on the forums.

That’s extremely unfortunate, as a carefully crafted lifecycle/action plan with great emails will help you gain the car shopper’s trust and differentiate your dealership from the competition. The combination of the two will help persuade that car shopper to buy from you.

Too often when we secret shop a dealership’s lifecycle, we are sent emails that ask “How can I help?” rather than answer with a “Here’s how I can help!”

Promote Why Buy Message

As I was listening to a recorded call on behalf of one of our clients, I ran into an exchange that’s still happening every day at dealerships.

A customer called in and asked for the dealership’s “best price” on a new vehicle. Not surprising, the salesperson responded with exactly what the dealership’s management team had trained him to say: “We don’t discuss price over the phone. You need to come in and speak to a sales manager” or something more simplistic like these 4 words.

The dark cloud over the dealership industry has got to be one of the most fascinating studies in business psychology ever.

About 4 weeks ago, I’m havin’ a beer at a house party at my place, and my neighbor is talking about his new ride:

neighbor: “It drives me nuts, why can’t car dealers just post their lowest price? They force me to negotiate”me: “you shopped on the internet and you visited the dealer with the lowest price… right?”

neighbor: “yea…”me: “did you buy it, or, did you ask for a lower price?”

neighbor: “well… I offered a lower price to close the deal that day”me: “I see, it was YOU wanted to negotiate a lower price, so, it was you that forced the dealer into negotiations…”

neighbor: [silence], then [mumbling], then [back peddling],me: “still holding on to the idea that dealers are bad? Think about this. Would you be happier if Verizon’s store managers competed against each other and you could get a discount on your phone AND your cell bill?”

neighbor: “yea, that would be cool”me: “this is how car dealers work, they FIGHT EACH OTHER for your business!”

neighbor: [silence]me: “think about it. If you bought a Tesla, do you think they’ll ever cut your a deal?”

neighbor: “nope”me: “Game. Set. Match.”

The anti-car dealer fever is generations old, yet NO ONE has updated how the Internet has blown up the old model. The tide has turned, car shoppers have enormous power.

If you had a salesperson who was going through a sales presentation and constantly choking on step four of that presentation process, you’d find a way to fix the issue in step four…

Better presentations lead to more sales, right?

Guess what? There is a point in your automated follow-up process that is choking and affecting not only the remainder of your follow-up campaigns, but possibly your deliverability to your other customers.

Unfortunately, most Dealers don’t have a clear idea on how to find the right sales candidate for today’s marketplace. Compounding the problem is that they employ an old school compensation plan.

The majority of Dealers are still looking for people who are like their “old horses” – high volume sales people who’ve been with the store for a number of years and don’t feel comfortable trying to adjust to a new type of customer.

But times have changed. There is more to sales now than the still-valuable skills to confidently approach strangers and make yourself immediately welcomed. Those “hearty handshakes” will always be appreciated, as is the ability to look strangers directly in their eyes. But … [Read more…]

Let’s face it: most dealers struggle with hiring qualified employees. And since the car business is a people business, our inability to achieve success with hiring new team members will have a negative long-term effect on the health and value of our dealership.

Why is Hiring Success So Difficult to Achieve?

I define “hiring success” as having the ability to predictably and consistently hire the right people for your store (or stores). Take some small comfort in the fact that, as an industry, we’re all pretty bad at meeting this standard. In fact, our company’s research on hiring effectiveness at retail automotive dealers shows that dealerships hire the right person for the job approximately 50% of the time.

“the average dealership experiences turnover that approaches 70% a year”

In other words, 50% of the time, the person who’s hired for your open job was not someone who should have been given the opportunity in the first place. It’s no wonder why the average dealership experiences turnover that approaches 70% a year. With results like that, why even bother having interviews?

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I've been following this for quite a while now, I'm really wondering what's they play behind this... How it's going to take form. Amazon is not aiming to be an information center only, as we all know. https://www.amazon.com/Vehicles/b?ie=UTF8&node=10677469011... Where is Amazon going with this?

I have seen many threads, and many articles about the importance of video in the dealer space. To give you all some background I created a personal YouTube channel that was moderately successful for a time - https://www.youtube.com/zachhouseknechtgaming. I was consistent, creating... Need Opinions on Video Content

This is from our GM who is looking for help: I am looking for some help. I was using Conquest through V-Auto to price all of my new Ford and Chevrolet inventory. Chevrolet has introduced a program that you have to breakdown how you are arriving at your selling price (which I like), but... Pricing […]

Editors

Jeff Kershner

I’m the founder of DealerRefresh. I got my start in the dealer business when I was 18. From there I've worked throughout several departments within fixed to variable ops. Whether it’s managing the desk, perfecting sales process or studying online marketing and media trends, I absolutely love this business and the challenges it brings. On top of keeping up with DealerRefresh, I consult with dealerships and key industry businesses. My passion has been and continues to be helping dealers leverage new media to sell and improve customer service.

Alex Snyder

2019 marks Alex's 30th year in the car business. In that time he has had a front-row seat for the rise of the Internet and has been working to bring the online and offline dealership experience closer. Whether you knew him from his life at Checkered Flag or his years with Dealer.com/DealerTrack/Cox Alex has remained an opinionated DealerRefresh contributor who enjoys nothing more than to poke at the unsaid truths in our industry. He also helped found FRIKINtech.